Ep. 1670 Can A Wine Brand Sold In Grocery | wine2wine Business Forum 2022

Since two thousand and seventeen, the Italian wine podcast has exploded. Recently hitting six million listens support us by buying a copy of Italian wine unplugged two point o. Or making a small donation. In return, we'll give you the chance to nominate a guest and even win lunch with Steve Kim and Professor Atilio Shenza. Find out more at Italian wine podcast dot com. Italian wine podcast is delighted to present a series of highlights from the twenty twenty two White wine business forum, focusing on wine communication and bringing together the most influential speakers in the sectors to discuss the hottest topics facing the wine industry to it. Don't forget to tune in every Thursday at two pm, Central European time, or visit point wine dot net for more information. So first of all, if you come here, Adam, let me just introduce then Adam. Adam, of course, is the cofounder of Vinepair. Thank you very much. And I was actually his intern. When was that? Two thousand sixteen, Josh? Okay. So as you've seen, not from him, from Erica Ducey yesterday morning after I suppose the print media? No. What was their, like, first, second, and third? Liquor dot com, I think. Yeah. Liquor dot com. And then, wine searcher. Wine searcher. And then he was wine pair. So, like, a real, bonafide magazine online magazine. This is kind of a big deal. Okay. We had a little, very provocative title. No one gives a shit about sustainability yesterday from Joanna. And today, what are you going to be talking about? Can wine sold in the grocery store ever be luxury products? Yes. So it's a it's an interesting, I think, angle. So, we'll see what he can do with this. And we'll come back for q and a later. Okay. Take it away, Adam. Thank you. Okay. My talk is gonna be based on a conversation we've had at Vinepere, a lot of different articles that we've published recently. About this topic. Basically, Canada brand, a wine brand sold in the grocery store, ever be considered a luxury product by the American consumer. So first, a little bit about Vinepair, as CV mentioned, were a digital publication based in the US, mostly for Genex, Millennials, and Gen Z. And we write about wine, beer, and spirits. We not only publish content online, but we also have a large podcast network. We have now four or five different original podcasts, video, All that good stuff. So I wanna start with a story about how this topic came to be. It's based on an interaction that I had at a restaurant in Napa called Gott's roadside. So earlier this spring, I was at Goths with my wife, and we're sitting outside in a rainstorm hit. And we went under an umbrella, and we were joined by a group of six millennial consumers who are in Napa, who are talking to us about our experiences in Napa, what wineries did we love, and somehow they asked us what we did. And my wife said that I was a journalist that writes about beverages. So they were trying to get my opinion of wineries that they should visit. I mentioned a few. I had happened to be in town for the Chateau Montelena anniversary party. So I mentioned that. Then I mentioned another winery that I knew was very close to Gott's that has a really good consumer experience. And immediately, they looked at me and said, we will not go to this winery. The wine is sold in Publix. And I contacted that winery because I know them pretty well. And they said, yes, this is a problem we're having. Right? We are not currently seen as a luxury product because some of these wines are sold in the grocery store. So I wanted to dig into why that is And what makes that so off putting to consumers when they think about premium wine? Because if we're talking about making money, being in the grocery store is very lucrative. Right? There's lots of consumers that walked on the aisle and as they're picking up their bread and their pasta and their deli meats, they throw a bottle of wine in the grocery store cart. Right? So isn't this a really good thing? And it is depending on what kind of wine you want to be. When we started posing this conversation to our staff and really digging into it, the first thing came up as well, what about this brand? Right. Vovecly Co is sold in every grocery store in the United States. Right. So how are they able to do it? And so many other brands have this issue that I experienced at Gops? The second, they put any of their wines in the grocery store. They immediately de premiumize themselves. And when I'm talking about being in the grocery store, I'm saying as long as any of your of your wines under your label in the grocery store, it starts to affect the perception of the wine. So even if let's say You make a high end barolo, your longue nebbiolo, right? Is in the grocery store? It immediately starts to impact it. Right? So the brand I'm talking about in Napa, none of their napa calves are in the grocery store, but they make a red blend under the same name in the grocery store. Right. So that wine is looked at as a grocery store wine across the entire range. So I wanna use Voo first as a case study to explain why it works here and why we can't say, well, because it works here, it should work for other brands. So Vov is the perfect example of a brand that uses marketing exceptionally well to build a luxury product. Right? So they are a brand that aligns themselves so strongly with the idea of luxury that it is almost impossible for the consumer to separate that perception no matter where they find the brand. So what does VOO do? Well, one thing they do very well across all of LVMH's portfolio is invest heavily in marketing. Right? And it's not just alignment in marketing. Right? They don't just sponsor events. They put on their own events, and they get press coverage for those events. One of the most famous events they put on is polo. Right? So they do a polo match in Los Angeles and in New York. Right? Where they have celebrities attend, they have journalists attend. It's all vuv. Right? It's in their trademark colors, and they get coverage for this event every single year. Right? And polo, in the United States, as is, you know, seen in most of the world is considered a very high end luxury sport. Right? So they align themselves with the idea of premium. They also connect the brand very well to other premium products. Right? So they sponsor Apprais Ski experiences. They pay to be in the finest hotels. They align themselves with other fashion brands in the LVMH luxury portfolio. So again, they tie themselves so tightly to luxury that even when you walk down the island Publix, you consider them a luxury product. Right? And it's a very hard thing to do. And it takes lots and lots and lots of money. Right? And that is why it is not easy to say, well, they do it, so we should be able to pull it off. Right? Because unless you have the capital to do this, This is not something that you should embark on. It's to say, well, I'm gonna put myself in the grocery store, but also try to get on the finest wine lists. On top of that, Pouffa champagne, and champagne amongst the American consumer across the board, is seen as a luxury product. Right? The this region specifically has done a very amazing job at the, you know, educating the American consumer on it being a luxury product. This used to be a problem for champagne. Right? Because because they were seen as such a luxury product, they were only bought during the luxury moments in our lives, right, whether that was a graduation, a birth, a marriage, the holidays. COVID actually helped champagne, because people started to say, well, I'm gonna celebrate every day because the pandemic was so hard for all of us. And so they started buying Champagne throughout, you know, their daily lives. And so now Champagne has a problem with actually having enough of it in the US. But it's still considered to be a luxury product. So why do you not want to be in the grocery store? Well, because nine out of ten sommeliers say they're not gonna put grocery store wines on their wine lists. Right? A anecdote that Dave Foster was sharing with me who gave a great talk yesterday. Say it was when he actually consults in markets for restaurants, he'll walk around the grocery stores and see what wines are actually available for sale. And we'll specifically not put those wines on the list of the restaurants he's working on. Right? Because consumers have this perception grocery store must mean cheap. The rare exception here is if you make a wine for steak houses. Right? So in the research that I did for this talk, when you look, if you make a really big, bold red wine, there is something about that and what consumers are looking for in the steakhouse. That still connects for them. Right? And so the prisoner's a very good example of that. Right? It's a wine that you can find in the grocery store, but you can also find at Bobby vans or other steak house chains. So first, if you wanna build a luxury brand, how do you do it? Right? And we're gonna look at a really good example of that through a friend of vine pairs. So, Humana States is a Amazing group of wineries, run by Carlton McCoy and Felani Bovier. And they have this incredible quote about how they're building luxury brands in the United States. And what they talk about is what Dave talked about if you attended his talk yesterday as well. It's deep relationships with the best restaurants and the distributors, sellers, somms, and influential media. That's how you do it in the US. It is connections to these people. It's investing in on the ground connections. It's making sure that you know what's happening in those markets, and it's having those deep relationships. So it means market visits. It means getting these psalms immediately to come to your properties, and it means pushing hard for placements. Right? So it means understanding truly what the restaurants are that are the influential restaurants in the market you wanna be in. And then making sure that you make those connections with those buyers in order to get your wines placed on those lists. And it takes a lot of time. Right? It takes time to invest in those relationships. It takes time to reinforce, those relationships with media, right, and with other connections so that you are able to build this luxury product. So I'm I'm sure a lot of you are sitting here being like, okay. Great. So it's talking about luxury, but what if I wanna be in the grocery store? And look, right now, that may be a really good decision for your brand. Right? Inflation is coming. Right? If we look at all the data, we know that we are going to face an economic downturn. If we do, we know that people are going to pull back. They're going to go back to the grocery store. So maybe this is the right strategy for you. Right? Goldman Sachs put on a report that we're seeing lower amounts of people in the restaurants, except for the really major markets. People are already starting to think about how they're spending their cash and how they're treating themselves with that extra money. And what COVID did is it taught us all how to cook, how to bake bread, how to make cocktails, and how to drink wine. Right? So we're used to consuming now at home. So maybe this is something that you wanna think about. Right? And a lot of grocery stores are premiumizing. Right? So they're getting nicer wines in the grocery store, higher priced wines, twenty, twenty five dollar wines. Right? So if you have a line like that, this might be a decision you wanna make. You just have to understand that by making that decision, you are taking that on premise channel away from yourself in that same market. Right? Because focusing on the grocery store means less buyers do you have to deal with, but it also means more competition. Right? Kroger is currently in talks with Albertsons to merge. Right? So it's gonna make even larger grocery an even larger grocery store chain. So there'll be more people fighting for fewer shelf placements. Right? Cause the buyers don't wanna have a massive book with tons and tons and tons of different companies they're dealing with. Right? They only wanna deal with a few. You're gonna have to compete to make sure you're on those shelves. But it does mean that if you work on building those relationships, there's fewer relationships. Right? If you if we go back to the luxury example, there's, you know, in a market like New York, you have to work with dozens and dozens and dozens of shams, Psalms, and small wine shops in order to build that profile in just one market. Right here, you can develop a relationship with the head buyer of Groger or Costco or Publix. And get into a thousand stores. But the the issue that I wanna bring up that you will deal within the grocery store currently is private label. Right? More and more grocery stores are focusing on private label. So you're gonna compete with the grocery store, right, with their own wines, with their labels that they can price better as you market yourself. Right? So you're gonna have to do more externally in order to get someone to walk in the grocery store and actually buy you because the grocery store is going to put their wines front and center. They're going to put their wine they're gonna price their wines on sale gonna have displays of their wines. So it's something that you have to think about when you think about entering the grocery store. Right? So it means it doesn't equal automatic success. It means it's going to again take marketing. It's going to take education of the consumer. In order for the consumer to walk in and look specifically for your wine. So in the end, you just have to make the best choice for your brand. Right? It's impossible to both be a luxury brand in the United States and have mass appeal. Right? Unless we go back to the VOO example and you just inherited billions. Right? And you're able to spend that kind of money and align that brand with so many other luxury products. If not, you have to make the best choice for your bottom line. Right? And for your goals. But you have to understand that once you make that choice, that is how you'll be perceived. Right? And it takes a lot to undo that choice. Right? So there's a there's a large decoupling that has to happen. Right? You have to think about, okay. Well, how do we remove ourselves from one strategy and invest in years and years and years in order to do so? So if you decide, oh, I have this great opportunity to take You know, my my wine brand that's a lower level San Giovanni, let's say, even though I make a brunella and put it in the grocery store, you have to understand that that perception will be for your brand across the entire line. So maybe it's a different brand that you create. Right? Maybe it's not taking that opportunity because the American consumer has these perceptions and there's nothing we can really do about it. So by takeaways, right, is if you are trying to build a luxury brand, if that's your goal, I would encourage you to avoid the grocery store. Instead, you need to think about other placements in order to build this brand. But don't discount the grocery store. If it's beneficial to you and your bottom line, if you're a larger producer, if you have the volume, You can place it if that's where you wanna be, especially with a coming recession because also investing too much in one strategy could not pay off in the long run. If we have a downturn and people don't go back to the restaurant. And three, regardless of which strategy you pursue, it's not enough to just get it there. You need to then educate the consumers and do the work through marketing, through relationship building, through being present in those markets. Right? Just because you get placed doesn't mean that you can guarantee automatic success. You have to do the work in order to be in the market and show your face so that people continue to think about your wine when they go to purchase wine. Thanks. Okay. Are there any questions from the floor that was that was super quick, completely exactly the opposite, from this morning? I'm just helping you catch up. Yeah. I know. It's like, oh my gosh. Any questions from the floor? Of course, Robert always has a question. I'm fascinated by the prisoner in this, environment. Can you build I mean, the prisoner was built on a red blend Yeah. But if I go into a store and it's still, a red predominantly red, product, but now there there's a white prism rather. Can you build from one product outwards, in the, in the stores without impacting, the on trade and vice versa. So you're saying, like, the prisoner as they're expanding now into whites and things like that? They're doing it pretty successfully. So I I definitely think that you can depending on what the brand is and the brand equity that you have. Right? So it's amongst the consumer, it's such a beloved brand and it's so trusted that yes. But you can't do it until you have that trust. Right? And so the consumer loves that brand so much and that wine so much that they're willing to say, okay. We'll try the chardonnay or we'll try the white blend. But that's that's rare. Right? And they're they really are a unicorn, which is why they sold for so much money. Hi. What's your view on some of the higher end grocery stores? Like Plumb Market in in Michigan, for example, or table and vine in Massachusetts. Because what I agree with you about it's hard to create a luxury brand at grocery store. I think that if you do it simultaneously with high end grocery stores in in other markets, I think it could be beneficial. And I have a second question, which is once you successfully build that brand in the on premise, do you think that it's possible to then take that brand to grocery without diluting it? So we were just talking about your first question before the talk. I think if the grocery store stays very regional, it's possible. The second, you know, you become whole foods, then it starts to be seen as the exact same thing as the other larger grocery stores. And again, I think then your highest end restaurants avoid those wines because They're they're go the consumer understands the pricing of that wine. They see it all the time. It doesn't feel special then to order that that wine as this this luxury experience at the restaurant. And in terms of your second question, I think it's risky. I think if you have gotten these incredible placements, you can do it, but what we see is where it works is at the boutique wine shops. Right? So getting those placements and then going to the best wine shops in that area or that market. Where people still sort of consider them to be equal. Think if you have a really amazing placement, and then all of a sudden you get this opportunity to drop a thousand cases at Costco, let's say. Right? It becomes a risk. And the consumer can start to say, okay. Well, now maybe this is a value brand. This is a brand that I'm not willing to pay that three x mark up for on the restaurant. And you and you can undo. Again, the only example that You don't see that with that often as champagne. I actually have a follow-up. So can you for for the tie ins that are in the audience? Can you define or name some of list the various groceries change that are luxury as versus non luxury. I think that would really be helpful for the Italians. So for luxury, you're looking at things like what we talked about in LA ear one. You you do have plumb market, Italy in the US is considered a luxury grocery store. A few others. Whole Foods's not as much anymore, especially since the Amazon purchase. Right. Wholefoot is non luxury stateside. No. It used to be. Yeah. But not anymore. It's it's too much. It's too mass at this point. There's things about it that are luxury in terms of some of the products you can buy. But it's not it's not on the same level. And now in a lot of markets, you have you have what's happening where there's boutique grocery stores. So for example, in in New York, there's a a small grocery store chain called union market. Right? That is more of a luxury esque chain than what you would find just regularly in the city. But that seems kind of counterproductive. Right? Yeah. The whole bit about going out to grocery is so that it is scale. It's but the small boutique ones are tiny. They're just like wine shops Exactly. In a way. Right? Okay. We'll take a question from Steve Ray. Thank you. Further. Sorry. Are you okay? Yeah. I am. Thank you. Regarding price transparency, a lot of these decisions by the trade is, confounded in some ways by being able to look up comparative pricing on wine searcher. I've talked to a number of wineries who really limit the distribution of their wines because they don't want they don't be sold at retail. They wanna, I mean, retail, they wanna maintain the restaurant business. So there's grocery on one side, but there's this whole issue of price transparency, and the trade is very aware of that that all this information is available. And if somebody's gonna go to a restaurant and buy a wine, they don't want them to know what the point of reference is. Yeah. I think that's true. And I think one of the the reasons that grocery can become such a an issue is we do all have this computer in our pockets now. So we can search at the restaurant for what the wine costs. I think there's still somewhat of a and, you know, I've a trepidation of looking rude by pulling it out at the restaurant to really start searching the wine list. But if you're in the grocery store and you're seen every day, you know that this, I don't know, Kianti is being sold at Publix for twelve ninety nine. So you know those prices more because this is a place that you go to once a week at least to do all of your shopping and you walk down the aisle and you see those brands. Right? And that was what was so interesting about this experience I had in Napa is I asked these consumers Have you ever had this wine before? And the answer was no, but we know the name of the winery because we see the brand in Publix every week. It's actually never tried it. Right? And so they didn't even know that it actually is a even that SKU is a very good wine, but because it's in Publix, it automatically was off their point of reference of a a high end napa experience. What do you think about, educate, for example, the waiter in or the family in the restaurant in order to become, not only a technical, explanation of, a technical teller about the technique and, organil organoletic, characteristics of the wine, but he's saying about becoming More emotional storyteller. Mhmm. That's, I think, Wendy Akia Esto? Okay. Sorry. So, I'm just gonna steal Dave Foster's answer from yesterday. Okay. Do that. Just do whatever you this same question, basically. So at at the level of someone like Dave, right, who owns an amazing wine bar in Brooklyn. Right? He cares about the technical as the owner as the buyer. Right? But his staff does connect with the emotion and the consumer connects with the story. Right? So the story is as important or more important to the actual end consumer. Right? The consumer at the restaurant cares very little to not at all about soil composition. You know, how much how how long the wine was in oak. Was it, you know, did it go through malolactic fermentation? Consumer doesn't care. Consumer cares about is it good? How will I have a connection with this wine? Is there a little bit of a story to be told? Right? So it is very important. That and being able to tell that story is very important. And the way that you connect that story is going to the market and meeting those buyers and having a staff training, you know, doing a event with the restaurant, making those connections so that the waiter or waitress can say to the consumer, oh, I just met this producer a few weeks ago. They were here at the restaurant. Their wines are amazing. They're so and and the person is so cool. You know, for example, Giuseppe, I'm going to vote for best dressed of wine to wine. Absolutely. I've loved your suits. They're so awesome. Right? And that is, you know, you can say, oh, I met him. He has an amazing style. He's so cool. Those are something that consumers wanna know, and consumers connect with. Okay. Are there any more questions from the floor? What are the demographics of grocery buyers? Americans? I mean, for the I mean, for the most part, almost everyone shops at the grocery store. The difference is in certain markets, the sale like in New York state. Right? The sale of wine in the grocery store is illegal. So so you're not going to you don't face this problem that we're discussing in every market. Right? So in New York, there's a little bit of like protection against this issue. But in Georgia, for example, this is the the major issue, and everyone encounters this one, and everyone chops at the grocery store because that's how you get food. And I think You know, while there is a boost in more people who are ordering through, you know, things like instacart, etcetera, the, you know, Amazon Prime where the grocers are being delivered to them still is the vast majority of Americans who are going and walking the aisles. And shopping for their food every week. Okay. Question over here? Oh, I'm sorry. I didn't see you. So, regarding, is there a difference between grocery store and say a big box liquor store or wine shop like Bevmo or total wine, are those viewed in the same manner? Yes. As a grocery store? Yes. The these mass chains are viewed by the consumer as that. They are mass chains with mass market brands. So if you're in total wine or you're in Bevmo, Costco, they are still all viewed by the consumer as mass chains. With big brands that have the power to push into those chains and market themselves. So again, that might be a very good strategy for you depending on the size of producer you are. But if you then are set, but that should then answer your questions too. Okay. Well, why isn't this amazing restaurant in Brooklyn willing to put me on the list? You you you can't have both. You can't have both. You have to choose one or the other. It's either a a luxury, you know, or a high end restaurant strategy or it is a large retailer strategy. I have two questions. I think you were touching a little bit about luxury products. And I just wanted to ask a little bit more, like, is it luxury or is just exclusivity within distribution channels, because there are plenty of non luxury brands that are sold just in specialized wine shops. And what what is specifically that we're looking with the grocery stores? And the second question is, are you mainly talking about a physical grocery shops. And does it change at all when we talk about online? So, yes, I'm mainly talking about physical. There's so few people that are actually purchasing their wines online that it's it's not having that same effect. And when I'm talking about luxury, I am talking about premium. So luxury premium sort of using them interchangeably. So you can be a boutique small winery and just have very little distribution and be seen by an American consumer as a premium product. Right? Champagne is really the only pure, pure, luxury wine in the market, and that's because of its connection to fashion and other luxury experiences. Is there a strategy to appeal more to grocery store buyer? I mean, that would be a question for someone who has successfully done that as a as a journalist. I do not sell my I do not sell wine to grocery store buyers. But from the people that I've I've spoken with, it's the person it's the same. It's personal relationships. It's, you know, going and visiting with them, tasting them, explaining to them. What is their benefit going to be to selling your wine? Right? And what work are you going to do to support that line? Right. I think that's the biggest takeaway is no matter which channel you choose, you have to invest in supporting that channel, whether it's through in person visits, marketing spends, you know, educational trips, things like that. You have to actually go do the work. It's not you can't be successful just by saying, oh, great. This store took the wine on and now I'm done. You know, I shipped my cases and I don't have to go to the market and do the visits. You have to or else the wine will sit on the shelf. And if the wine sells, the grocery store will continue to buy Let's give it up for Adam Teeter from Viator. Thank you very much. Listen to the Italian wine podcast, wherever you get your podcasts. We're on SoundCloud, Apple Podcasts, Spotify, email ifm, and more. Don't forget to subscribe and rate the show. If you enjoy listening, please consider donating through Italian wine podcast dot com. Any amount helps cover equipment, production, and publication costs. Until next time, Cheaching.